Yahoo disclosed last week that African-Americans made up just 2 per cent of its workers, while Hispanics stood at 4 per cent. Those revelations came days after Facebook reported it had employed just 81 blacks among its 5,500 U.S. workers.

Silicon Valley has a diversity problem, a contentious issue that has come into sharper focus in recent months as tech firms sheepishly released updates on their hiring of minorities. The companies have pledged to do better. Many point to the talent pipeline as one of the main culprits. They’d hire if they could, but not enough black and Hispanic students are pursuing computer science degrees, they say.

But fresh data show that top schools are turning out black and Hispanic graduates with tech degrees at rates significantly higher than they are being hired by leading tech firms.

Last year, black students took home 4.1 per cent of the bachelor’s degrees in computer science, information and computer engineering, according to an annual survey by the Computing Research Association of 121 top U.S. and Canadian colleges. That’s double the average of blacks hired at the biggest tech firms. Hispanics accounted for 7.7 per cent of the degrees.

“It would be a more convincing argument if their numbers more closely tracked what we were producing,” said Stuart Zweben, an Ohio State computer science professor who helps conduct the survey. And Silicon Valley’s diversity problem exists not just on the tech side.

They aren’t looking in the right places

Tech’s largest firms also significantly lag in their hiring of minorities for sales, marketing and public relations jobs.

At Google, blacks and Hispanics each accounted for just 4 per cent of Google’s non-technical workforce last year. At Facebook, blacks made up 3 per cent of its non-tech workforce in May, while Hispanics were at 7 per cent.

In the overall U.S. workforce, blacks made up 13 per cent of employees and Hispanics were at 16 per cent.

The lack of minorities in Silicon Valley has been met by a rising sense of urgency. Firms only began disclosing their diversity data last year under pressure from groups such as Jesse Jackson’s Rainbow PUSH Coalition. And those numbers have underscored the extent of the problem in this tech hotbed, where former start-ups have matured into some of the nation’s leading economic engines. Further doubts about workplace equality in Silicon Valley were stoked earlier this year by the high-profile trial involving former Reddit chief executive Ellen Pao, who lost her sex discrimination case against storied venture capital firm Kleiner Perkins Caufield & Byers.

Jackson refuted claims by companies that there simply isn’t a robust talent pool of blacks and Latinos. He for years attended shareholder meetings for Apple, Microsoft, Facebook and Google and demanded that the companies release data on their workforces.

“They aren’t looking in the right places,” Jackson said in an interview. “And this doesn’t answer the question of why the vast majority of their workforce — which is non-tech — is also lacking diversity.”

* * *

For a tech sector accustomed to hacking its way out of problems, making its workforce more diverse has emerged as a major challenge. And the industry has only recently admitted its shortcomings. Until last year, Google, Apple and Facebook, among others, refused to disclose data on workforce diversity. Some firms — such as Oracle, which has 122,000 workers worldwide and declined to respond to a request for comment for this story — still haven’t. Yahoo also declined to comment.

In tech’s data-driven world, the numbers were bruising. For example, Facebook’s data showed it added only seven black employees from 2012 to 2013, before hiring another 36 between 2013 and 2014.

David Paul Morris/BloombergFurther doubts about workplace equality in Silicon Valley were stoked earlier this year by the high-profile trial involving former Reddit chief executive Ellen Pao.

“We know we have work to do,” said Ime Archibong, a Yale grad who is black and works at Facebook as its strategic partnerships director. “We know that.”

Others said it will take time for efforts to reflect in their employment data.

“The pipeline is just a piece of it. Our main issue is that any meaningful change for a company our size takes time,” said Roya Soleimani, a spokeswoman at Google.

Facebook’s challenge is that it is looking for a very specific group of computer science graduates, for instance, people who understand data systems and algorithms, said Maxine Williams, the global head of diversity at Facebook.

“We are trying desperately to have a more diverse workforce and deal with the constraints on the pipeline,” Williams said.

But some in the tech world believe the focus on the pipeline overshadows the wealth of qualified minority candidates already out there.

“It’s not even remotely a pipeline issue,” said Andrea Hoffman, who runs Culture Shift Labs, which helps companies find minority and female talent. Her company recently hosted a brunch in Palo Alto, California, for minority job-seekers in tech and finance. The 200 seats were snapped up, and she had to make a waiting list for 200 more.

Asians are the exception. They have been hired at rates far above other minority groups and even above their representation in the overall U.S. workforce. At Facebook, for example, 41 per cent of the tech workforce is Asian.

The strong recruitment of Asians is attributed to the hiring of skilled immigrants, particularly from China and India, and high U.S. graduate rates of Asians in computer science programs. Asians have also established tight-knit networking organizations such as The Indus Entrepreneurs, or TIE, a business networking group that began in 1992 in Silicon Valley and now has13,000 members around the world.

* * *

AP Photo/Marcio Jose SanchezA visitor poses for photos in front of the Yahoo sign at the company's headquarters in Sunnyvale, Calif.

Big tech companies, aside from their concerns about the pipeline, also point to a tangle of challenges, including unconscious biases that have given preference to white men. That bias shows up in recruiting, with companies drawing from the same top universities, where black and Hispanic graduates are still lagging other groups.

“Once you have a Latina Marissa Mayer and a black Mark Zuckerberg, a lot of these problems will go away,” said Van Jones, one of the founders of Yes We Code, a group that aims to teach 100,000 low-income people to write computer code. “The pipeline isn’t big enough and the uptake isn’t aggressive enough.”

The problem is particularly acute at start-ups, where black founders are just 1 per cent of venture-invested firms, according to a 2011 survey by CB Insights. Venture capital firms — mostly led by white men — have admitted that they are often introduced to start-ups from their own business contacts — also largely white men. And then the big firms acquire these start-ups or hire from them in a self-perpetuating pattern.

More comprehensive data on the number of black and Latino partners at venture firms isn’t yet available, said Kate Mitchell, a partner at Scale Venture Partners and the head of a diversity task force for the National Venture Capital Association trade group.

“I think it says something that we don’t even have the numbers,” Mitchell said. “How do we even know it’s a problem if we don’t have the numbers to show it exists?”

There is a rich body of research that shows how big companies used specific plans to increase diversity. A 2015 study by the McKinsey consulting firm showed that companies with more diversity in leadership were 35 per cent more likely to report financial returns above their national industry median.

If your leadership team is constantly talking about it … that will move the needle

The issue of diversity “hasn’t moved into the top priorities so that it is something the CEOs are talking about constantly,” said Megan Smith, the national chief technology officer appointed by President Barack Obama to lead tech policy. “That is something the research shows works; that if your leadership team is constantly talking about it and iterating on it just like they would on products and businesses, that will move the needle.”

In 2000, Coca Cola settled a US$192.5 million racial discrimination lawsuit brought by black employees who accused the company of race-based pay discrimination. Throughout the 18-month court battle, the company’s reputation suffered as the case drew international attention.

As a result, the company rewrote its employment policies and doubled the number of minorities in management positions. Today, African-American staff make up 21 per cent of the company, while Hispanics are at 18 per cent.

* * *

In the last year, the biggest tech firms have announced a slew of programs aimed to increase diversity in their ranks.

Facebook expanded its summer internship program for minority computer science majors and started a new internship for minority business majors. Facebook also implemented a rule that requires recruiters to interview minority candidates.

Google, Facebook and Apple expanded the number of colleges for recruiting. Google said that it found that 35 per cent of black computer science graduates were coming from historically black colleges. So two years ago, it began to embed engineers at those schools to teach and mentor students into careers at the company.

Intel has been particularly aggressive. Earlier this year, the chipmaker pledged that its workforce would reflect the broader U.S. labour pool by 2020, and it created a US$300 million venture fund designated for minority-led start-ups.

Christopher Hocutt is one of those who have benefited from the efforts. The Howard University student, who is black, struggled to get a summer internship in Silicon Valley, even with solid grades and after serving as president of the school’s Association for Computing Machinery.

During his junior year, Google began its guest teaching program and sent an engineer to Howard. The Google employee became a mentor to Hocutt, teaching the Richmond, Virginia, native what to expect in a summer internship interview and making important introductions to recruiters.

“I didn’t even know where to start and I didn’t know how important it was to know how the process worked,” said Hocutt, who got the summer internship.

This summer, Google hired 30 college students from the historically black colleges for summer internships. Hocutt graduated from Howard University in June and began as the first full-time hire from the search-engine giant’s program.

The bank of the future will be in our pockets or on our wrists, not on street corners or housed in high-rise towers.

Mobile banking is going viral and the first adopters are the “millennials” (those born after 1981) and the “unbanked” poor of all ages around the world. They are leaping into this brave new banking world first, but the rest of us are going to follow.

I was part of a Silicon Valley team that hosted a conference in New York this week into the bank of the future. It was interesting to note there are a number of factors contributing to this transformation: The 2008 financial meltdown has tarnished the banking sector’s image, as has banking’s proclivity to charge high fees. This has swollen their coffers at the expense of consumers and taxpayers and makes them vulnerable to the online world that aims to dis-intermediate them pronto.

There will be cheering from the sidelines. A recent Viacom Media survey showed that four of the 10 least-loved brands in the United States are banks and 71 per cent said they would rather go to the dentist than listen to what any bank says.

Enter “fintech,” a burgeoning industry that includes Apple, Facebook and 8,000 start-ups in the U.S. targeting the financial sector’s various profit centers by offering online real-time services at a fraction of the fees currently charged. Within five years, we will swipe our smart phones or watches to pay for most goods and services, use phones as digital wallets, use them to borrow money, invest it and transfer it to other countries. Insurance is also on the hit list.

“Billions are going into these startups,” said Victoria Vysotina, a mathematician and CEO of VV Strategic Group in New York City. “The LendingClub and other peer-to-peer lenders are expected to get 30 per cent of the loans business in the United States in a few years.”

Besides lending, she believes all financial intermediaries will be attacked. Credit cards will be replaced with phone payment schemes such as Apple Pay, just being rolled out. Another, called Kash, designed to circumvent the credit card network and its high fees has been launched recently and is, ironically, financed by a company run by Joe Saunders, former chairman of global credit card giant Visa Inc. It will charge vendors 0.25 per cent per transaction instead of the current three to four per cent.

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Further down the road, asset management, and hedge funds, will be replaced by online cheap or free ETFs, exchange-traded funds. Wealth management will be done online by robo-advisers and investment banking will be disrupted dramatically by crowdfunding when U.S. regulators give the green light shortly to the sale of equities. “And there’s nothing the banks can do about it,” Vysotina said.

Necessity has been, as usual, the mother of invention, and is why Kenya became the world’s pioneer in the re-purposing of tech to replace traditional banks. Its banking system is so badly broken and inadequate that telecoms giant Vodafone started a cellphone network called M-Pesa (Swahili for Mobile and Money) and 60% of the country’s adults have joined, some 17 million. Users can deposit, withdraw, transfer money and pay for goods and services with their mobile device. Deposits and withdrawals are made at cell phone retails outlets or with phone sales personnel, acting as banking agents. It’s now in Afghanistan, South Africa, India and Eastern Europe.

Another multi-billion dollar market is “remittances” or money sent home by workers abroad. Western Union dominates this US$583 billion a year transfer of funds and collects transaction fees of nine percent. Facebook is getting into this market and believes it can make money charging only a fraction of nine percent per transaction.

In May, another Silicon Valley giant weighed into the banking space. PayPal and Yelp founder, and Yahoo director, Max Levchin successfully raised US$245 million to finance a lending system to replace credit cards. Some 82 million in the U.S. are not “unbanked” because they have no credit rating or are immigrants, new citizens, students or inexperienced.

His bank, called Affirm, can be “joined” by simply submitting a name, mobile phone number, birthday, and last four digits of a social security number. Affirm has devised technology that can establish reliable creditworthiness, and customize loan limits, by using analytics that evaluate the borrower’s online and social network behavior.

Approved shoppers will be able to borrow money at the point of sale to buy goods and services, and will be told upfront how much and how many monthly installments they must make. “There’s no compounding interest, hidden fees, or debt calculators here. This is a simple, fixed-term loan, and the approval is in real time, so you know how much you’re borrowing, and what your payments will be each month, before you make your buying decision. We think of it as the future of honest finance.

“I wanted to make a bank that didn’t suck,” Levchin said in an interview.

And so apparently do millions more consumers. That’s what the technology sector has identified and that’s why the world’s biggest “banks” will be technology companies.

dfrancis@nationalpost.com

]]>http://business.financialpost.com/diane-francis/diane-francis-why-the-next-big-banks-will-actually-be-tech-companies/feed0stdlending-clubHow Detroit is trying to take the driverless-car mantle from Silicon Valleyhttp://business.financialpost.com/news/transportation/how-detroit-is-trying-to-take-the-driverless-car-mantle-from-silicon-valley
http://business.financialpost.com/news/transportation/how-detroit-is-trying-to-take-the-driverless-car-mantle-from-silicon-valley#commentsWed, 27 May 2015 14:51:46 +0000http://business.financialpost.com/?p=555849

Detroit put the world on wheels and should be the place that takes the driver out of the driver’s seat, according to a coalition of Michigan business leaders and politicians.

The new group, MICHauto, unveiled an initiative Wednesday to promote Detroit and Michigan for development of a new generation of mobility, including self-driving cars. The coalition includes Ford Motor Co. Executive Chairman Bill Ford and General Motors Co. Chief Executive Officer Mary Barra.

The effort is a response to Silicon Valley’s growing automotive influence as companies such as Google Inc. and Apple Inc. develop driverless vehicles alongside electric-car maker Tesla Motors Inc. Michigan led the U.S. last year in connected-auto projects with 45, to California’s 31, the group said.

“Detroit and Michigan are in the crosshairs of some very talented innovators in places like Silicon Valley,” Doug Rothwell, president of Business Leaders for Michigan, a roundtable of top executives, said in a statement. “Michigan has to work quickly and cohesively to maximize our existing automotive resources in next-generation mobility.”

Michigan Governor Rick Snyder has publicly complained that his state was losing the public-relations war to Silicon Valley. That could cost Michigan thousands of jobs and billions of dollars in investment if the coming generation of automotive development shifts to California.

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“Our biggest constraint compared to Silicon Valley is we’re crummy at marketing,” said Snyder, a Republican, in an April interview in Ann Arbor, Michigan. “Much of the perception is Google and their car driving around Silicon Valley. We have exponentially more research going on within a few miles of here.”

Snyder, Bill Ford and other business and political leaders are gathered this week at an annual policy conference on Mackinac Island, an old-world vacation destination where cars are outlawed and people travel by horse-drawn carriage.

The group promoting the state’s leadership in automotive engineering and design includes Michigan Economic Development Corp., Business Leaders for Michigan, the state’s Transportation Department and the University Research Corridor.

Southeastern Michigan, which includes Detroit, has the highest number of “advanced auto industry jobs,” with 67,825, and businesses, with 462, in the U.S., the coalition said.

Justin Sullivan/Getty ImagesThe number of cars connected to the Internet worldwide will grow to 152 million by 2020 from 36 million last year, according to IHS, a research and consulting firm.

Leadership Challenge

“The challenge now is to maintain and capitalize on this advantage,” Kevin Kerrigan, senior vice president of the automotive office at Michigan Economic Development Corp., said in the statement.

Technology is becoming a bigger part of the auto industry, which accounts directly or indirectly for almost 20 per cent of jobs in Michigan, according to a 2014 study by the Center for Automotive Research in Ann Arbor. More than 32,000 people in metro Detroit work in computer-systems design, much of it tied to the auto industry, according to the Washington-based Brookings Institution.

Detroit in 2013 had the fourth-highest concentration of advance industry employment — 14.8 per cent of its work force — among 100 of the largest U.S. metropolitan regions, according to Brookings. San Jose, known as the capital of Silicon Valley, ranked first, with 30 per cent. The study examined 50 industries that employ 80 per cent of U.S. engineers, produce 90 per cent of private-sector research and development, and generate 85 per cent of the nation’s patents.

Expanding Market

In motor vehicles, computers control everything from engine and braking systems to lane-change sensors to dashboard touch screens for entertainment and communications. Technology is the top draw for 39 per cent of car buyers, compared with 14 per cent who care most about horsepower and handling, according to a 2013 survey from the Accenture consulting firm.

The number of cars connected to the Internet worldwide will grow to 152 million by 2020 from 36 million last year, according to IHS, a research and consulting firm.

Detroit faces a dire future if it doesn’t significantly shift its focus to self-driving cars and shared mobility, according to an analysis published this month by Barclays Plc.

U.S. auto sales may drop about 40 per cent in the next 25 years because of shared driverless cars, forcing mass-market producers such as GM and Ford to slash output, according to the report by Brian Johnson, a Barclays analyst.

Large-volume automakers “would need to shrink dramatically to survive,” Johnson wrote. “GM and Ford would need to reduce North American production by up to 68 per cent and 58 per cent, respectively.”

]]>http://business.financialpost.com/news/transportation/how-detroit-is-trying-to-take-the-driverless-car-mantle-from-silicon-valley/feed0stddriverless-carJustin Sullivan/Getty ImagesFor Stanford class who ‘graduated the day the Web was born,’ a brand new world in which men ruledhttp://business.financialpost.com/entrepreneur/fp-startups/for-stanford-class-a-brand-new-world-in-which-men-ruled
http://business.financialpost.com/entrepreneur/fp-startups/for-stanford-class-a-brand-new-world-in-which-men-ruled#commentsMon, 29 Dec 2014 14:00:43 +0000http://business.financialpost.com?p=506377&preview_id=506377

In accordance with the New York Times licensing agreement, this article has been removed. You can still view it at NYT.com here.

PALO ALTO, CA – Big ideas as well as big trees grow in this part of the world, a region with a distinctive ecosystem and a GDP bigger than Switzerland’s or Ontario’s.

Catalyst for this unique ecosystem has been the U.S. military research budgets and Stanford University. This engineering, science and technology culture has grown for decades as a result of massive infusions of money and the university’s entrepreneurial engineering bent.

Here the world is being reinvented and reimagined by “Valley” denizens who hail from across the United States and the world too. An estimated 250,000 Canadians work here devising the cool toys and awesome apps that have transformed everything.

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AP Photo/Lowe'sA woman holds a nail up to be scanned by an OSHbot robot. The robots are equipped with 3D cameras so they can scan and identify items. And customers can research items they want to buy on their screen. Then the robot can lead them to the aisle where an item is located.

This month, the world’s first retail robot was rolled out in a Lowe’s hardware store in San Jose. The five-foot robot serves as the store’s greeter, knows where every nail and gadget is located and assists people in English or Spanish. The two in-store robots then direct customers to the appropriate aisle or leads them there. If the product is missing, the robots can request restocking or order the products for future delivery to the customer from another store.

The robots are new, and costly (about $150,000) but once any kinks are ironed out, developers envision hundreds or thousands will be deployed in order to provide enhanced service and inventory control in stores.

Associated Press files

But robots are nothing new in this region. Google’s fleet of a dozen driverless robo-cars ply the streets with three-foot sensor towers that “see” everything around them. Each has a human behind the steering wheel just in case, but the fleet has driven 700,000 kilometers safely in the past two years, including navigating the eight tight hairpin turns on San Francisco’s Lombard Street.

The next step, next fall, will be to launch a fleet of fully autonomous, two seat, egg-shaped test cars that go only 25 miles per hour and will be equipped with sensors, computers and lasers to guide them to destinations specified on mobile phones by their passengers. The prototypes only had a button to stop the vehicle, but California balked and will require each to have a brake and gas pedal.

Once tested and fully licensed, Google hopes to transform the transportation system in a region where traffic clogs are as common as startups. “On a normal operating highway, cars take up a tiny fraction of the space,” said Google co-founder Sergey Brin. “Mostly, it’s all air between you and the car in front of you, to the sides of you. Self-driving cars can chain together and use highways more efficiently.”

One New York planner estimated that four times as many cars could travel through a corridor as is currently the case, saving trillions in road and public transportation costs.

Driverless cars are being tested in several states, and countries, and Brin believes they will be available commercially by 2018. Driverless cars could take blind or disabled people anywhere, pick up groceries or take children to a soccer game. Not surprisingly, all major auto manufacturers are working on their own driverless version.

Robotics are just one sector being developed here. Algorithms are being applied in genetics and banking. A case in point is the Lending Club — the first of many peer-to-peer banks that went public this week — which uses mathematical formulas to match lenders with borrowers who will repay loans.

Randi Lynn Beach/The New York TimesGoogle employees ride the shuttle equipped with wi fi and leather seats from San Francisco to work at headquarters, in Mountain View, Calif. The perks of working at Google are the envy of Silicon Valley.

The work ethic is extraordinary here too, ironic since much of what’s going on here will destroy most traditional jobs eventually. Google has a fleet of 150 buses to ferry people around its regional offices because of a lack of public transportation alternatives.

One Google worker I know catches her bus in Mountain View at 6:30 every morning for San Francisco and arrives back at 8 every night. Others spend their spare time as members of the “maker movement”, frequenting well-stocked work shops such as Tech Shop to build prototypes or cool gadgets for themselves.

Mark Hatch, author of “Maker Manifesto”, launched this chain of shops, each outfitted with $3.5 million worth of everything from laser cutters to lathes, saws and plastic extrusion gizmos. These shops are open 24/7, staffed with helpers, trainers and are run like a club at a cost of $125 a month. Eight are opened, and thriving, and another 30 are in the pipeline. But opening these outside the “Valley are fraught with peril unless there’s a population of geeks who would rather tinker than play golf or video games.”

“Billions of dollars have been created and thousands of jobs by ‘makers’ who come to our shops and create products,” said Hatch in a lecture at Singularity University this week.

Poster boy is a glassblower from St. Louis named James McKlevey, founder of Square (a revolutionary credit card swipe-system) who made a prototype to show investors and now has a company valued at $6 billion.

Another success story was Phil Hughes, an electrical engineer who, with a partner, devised and built a prototype of a device that will dramatically reduce power usage in the world’s server cooling systems for $20,000, saving billions. The device has been licensed by one of the world’s biggest electrical companies.

Similar clusters have sprung up around the world, but with little success. Part of the problem is that the region represents a giant sucking sound drawing in talent and brains and ideas from around the world. The engineers are here. The attitude is here. The venture capital is here. The infrastructure is here.

And the sky isn’t the limit here. Projects for space travel, mining asteroids and high-altitude balloons launched to replace the world’s microwave towers are well advanced. It may sound like a Star Trek rerun, but robots in our stores is only the beginning.

Sometimes even a prophet has to leave his own country to better understand the world.

That’s certainly the case for startup guru Steve Blank. The retired serial entrepreneur and author is the co-pioneer of the “lean startup” methodology, a customer-first model that has revolutionized the way startup companies come to market.

Mr. Blank now thinks the world needs another revolution, because he no longer believes his model works for startups outside of Silicon Valley.

(The following paragraph can be skipped by readers under 25: In a nutshell, a “lean startup” takes as little time as possible to get its “minimal viable product” to market, in order to gather vital customer feedback before it exhausts its startup capital. Young entrepreneurs around the world, especially in technology, have adopted the lean startup as their base model — and angel investors and VCs pretty much insist on it.)

The trouble is, as Mr. Blank admits, the “lean startup” was developed in and for Silicon Valley. So the process assumes startup entrepreneurs have full access to eager and intelligent business customers, hosts of industry angels and venture capitalists with money to burn.

On a trip to Australia last month, Mr. Blank experienced an epiphany. Meeting with a coalition of entrepreneurs in the tech/sports space (think wearable devices and cutting-edge fabrics), he realized the lean startup framework didn’t account for the vagaries of local economies. Australia sports-tech entrepreneurs trying to scale their businesses would find that their major customers are in the U.S., halfway around the world. And unlike most Valley startups, the Aussies would need to source manufacturing expertise — which means budgeting for several trips to China.

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If entrepreneurs around the world can’t rely on the Silicon Valley bible, what should they do? In a recent essay, Mr. Blank suggests that communities and industry clusters need to start collecting their own data on what works and doesn’t, and create their own custom “playbooks” for winning in world markets.

Given that last week was Global Entrepreneurship Week, I called Mr. Blank to find out more about his attempt to devise a globally inclusive model of entrepreneurship. The first question, though, was for the home team: was he thinking of Canada as he developed this framework? “Yes, I had Canada in mind,” Mr. Blank said. “It is not part of the U.S. market. In fact, most of the U.S. is not part of the U.S. market” — an acknowledgement that what works for Silicon Valley may not work in Missouri, let alone Montreal.

Crucially, says Mr. Blank, lean startup assumes that rookie entrepreneurs can access a Rolodex full of mentors and potential angels within a few square miles, at the cost of picking up the tab for coffees. But outside the Valley, “the density and risk profile of investors is not the same,” he says. “Without investors, you can’t have a cluster. It’s like one hand clapping.”

One common feature of most startup environments is the “meetup.” Through organizations and events such as Startup Drinks, Startup Weekends, Startup Grind and Startup Canada’s growing network of Startup Communities, many entrepreneurs meet regularly to share stories and motivation. But, as Mr. Blank points out, there’s no attempt made to gather intelligence from the entrepreneurs in attendance. “It’s such a waste,” he says. “You’re getting together, but you’re not learning from each other.”

Mr. Blank thinks it’s time to turn these meetings on their head, and make sure that community leaders start collecting this data. (“So you’re crowd-sourcing the playbook,” I suggested. “That’s it!” Mr. Blank replied. I felt honoured to contribute a tiny piece to his global theory.)

So Mr. Blank would like to see Canadian meeting organizers take a half hour at every meeting to poll attendees. He proposes dividing the group into industry sectors and asking questions such as:

What’s the first step you took in starting your business?

How many of you raised money? How much and who from?

How many of you raised money in the U.S.? What did you learn from doing that?

What do you wish you could have done differently?

“Keep asking questions, and try to rough it into a framework,” Mr. Blank suggests. “In an hour you could put together your first rough playbook.”

But would entrepreneurs willingly contribute to creating a how-to book that might help their competition? Mr. Blank scoffs at the question: “This is not a zero-sum game. It’s not as if, if I tell you something that helps you, I will lose the opportunity. When you talk scaling, there’s infinite cash and infinite opportunity.” He says the playbooks will offer the added benefit of reinforcing the pay-it-forward culture that built Silicon Valley. “We still have the idea that you share information as often as you can.”

At any rate, Canada could be in the forefront of the lean-playbook revolution. Startup Grind Toronto, a 1,700-member chapter of a worldwide, Silicon Valley-based organization, has agreed to “workshop” a playbook session at a meeting later this week. “If there were a playbook” for local entrepreneurs, says Toronto chapter director Michael Cayley, “it would help people focus on their business, instead of the gaps.”

Ottawa-based Startup Canada says leveraging entrepreneurs’ experiences is a natural evolution for its growing network of “Startup Communities,” composed of local entrepreneurs from St. John’s to Nanaimo, B.C. “We are prepared to step up to Steve Blank’s challenge to develop crowd-sourced local playbooks built by entrepreneurs for entrepreneurs,” says founder and CEO Victoria Lennox.

In business as in life, despite best intentions things don’t always work out as planned. I recently pressed the big “reset” button that comes with all startups and would like to share my experience of starting over.

After spending three years living and working in Europe, my husband and I moved back to North America to pursue new opportunities. I had been working on Countlan, a quarterly digital magazine, for two and a half years and was mid-way through a long overdue website refresh and finishing up the seventh issue.

Spurred on by the reflection that goes hand in hand with an international move, I took a pulse check of scope, direction and milestones of the magazine. In a business model that is dependent on achieving a certain number of impressions, reads, eyeballs and clicks, Countlan’s social media platforms were finally gaining positive traction. The uptick registered in the number of downloads, reads and user engagement were signs to keep going, but something was nudging my judgment to reconsider my course of action.

A few trajectories could play out for Countlan: keep business as usual and stay self-funded and keep on publishing quarterly issues while trying to secure social media brand partnerships; find a partner and funding in my new home of Silicon Valley; or pull the plug. I decided my reset button was to pull the plug. I visualized pressing a big fictitious red button that would speak words of encouragement to me, like the ‘easy’ button from office supplies store Staples.

Transitioning from an activity, business or project that occupies your productive time and livelihood to a handful of posts a month, was easier said — or pressed — than done. This was the right course of action for me as I was not prepared to digest the opportunity costs (my time, money and head space) of working on Countlan for a third year.

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However, contrary to my expectations, I found the reset experience rather deflating and humbling. Intellectually, I was prepared to become a statistic and swallow the reality about entrepreneurial success and failure rates. Emotionally, I caught myself in a few moments of self-pity and mourning over something I was attached to. Psychologically satisfying? Yes. Helpful behaviour to muster up the energy and ideas to move on to something new? No.

So what is a GenY bootstrapper to do when she is down and out in Silicon Valley? Four things: Learn from my mistakes, put an abrupt end to self-pity, enrol in a fun activity to help clear your head, and interview for jobs.

Learn from my mistakes One of my take-aways from Countlan was that my next business had to be transactional from the start. I would return to a basic business model, one where I would create a product or service to sell to a market and make use of the entrepreneurial experience I gained from baking and selling cupcakes and designing and selling jewellery and later in an intrapraneurial role at Umbra. I had no interest in working on another platform-based freemium business model where success was contingent on a race to collect eyeballs and clicks before the product could be monetized. While the model works for some, for sole-proprietor-GenY bootstrapper, Sarah Lambersky, it does not.

Put an abrupt end to the self-pity There is nothing more damaging to progress, creativity and innovation than self-pity. It can take you on a downward spiral if you do not halt it immediately. Back in high school when you broke up with someone, I think the self-pity party calculation — a measure of how long it was acceptable to dwell and work through the pain of having a broken heart — was something like one day or week for every month you were together. The same applies here. Acknowledge, cry, stamp your feet, talk it out, take a deep breath, but know that at some point (hopefully sooner than later), the wallowing in pity must come to an end. Otherwise, the optimist in you might miss out on developing the next big thing. That would be a true pity.

Enrol in a fun activity For all the wonderfully diverse reasons hobbies exist, I turn to them to both clear my head and shift focus away from an area in my I am less enthusiastic about. While yoga, cooking and reading take up the bulk of my leisure activities, during this transition I made an effort to get back on the golf course a few times a month and I also enrolled in a six week pottery class, something that I have not done since I was five years old. Both activities served their purpose.

Interview for a job There is nothing like it to help clarify your message, articulate your unique selling points and strengths and see what is out there. Two positive things can result from interviewing: You may unexpectedly land a job that captures your interest and is a good fit, or after interviewing and honing, crafting and re-telling your story to prospective employers, you realize there is no way in hell you are going to sit at a desk and work for someone else, thus rekindling the motivation and focus you lost while pressing the “reset” button. Either way, it’s a win-win.

Today, I am putting the finishing touches on a new business and preparing for a soft launch before the end of the year. I have no regrets about Countlan. I am proud of the finished product, its content and the opportunities I created to meet and interact with many interesting, talented individuals around the world. While hitting a home run is the preferred outcome for a startup, I think the real reward is not giving up when things don’t go as planned and developing the skills to implement a quick mental turnaround so you can work on your next idea.

The public may only get to see them in jeans and hoodies, but a lot of Silicon Valley executives are secret fashionistas, says men’s fashion maven Larry Rosen.

You wouldn’t know it from watching Apple Inc.’s product launch on Tuesday, when executives including CEO Tim Cook, Vice-President of Technology Kevin Lynch and Senior Vice-President of Worldwide Marketing Phil Schiller took the stage in the typical Silicon Valley uniform — in their case, jeans and ill-fitting, sometimes-untucked, collared shirts.

But Mr. Rosen, CEO of upscale menswear chain Harry Rosen, swears that this look is meant to make “some sort of counter-culture statement” at public events, and many of them are hiding a real sense of style.

“I have a very good friend who owns a store in Palo Alto called Wilkes Bashford … and all these guys buy beautiful merchandise,” Mr. Rosen said in an interview.

“The reality is that these executives at all these Palo Alto firms don’t dress like that normally.”

Related

It’s the complete reversal of Wall Street or Bay Street. Instead of dressing up to impress, many Silicon Valley executives dress down to impress — an irony given that they’re now trying to sell the world on expensive wearables like the Apple Watch.

“Their indifference as to what they wear is calculated,” said Tom Searcy, founder and CEO of Hunt Big Sales, a U.S. consultancy that helps clients land big accounts.

“This is the same kind of thing you see in high school, where people want to express themselves and look completely unique so they all dress the same.”

Their indifference as to what they wear is calculated

In fact, the studied indifference of the jeans-and-hoodie uniform — captured so well by the recent HBO sitcom Silicon Valley — is meant to convey a very specific message, Mr. Searcy said — a post-modern de-emphasis on style.

“The point is that ideas should carry the day, not the trappings of Wall Street.”

Silicon Valley’s refusal to conform to Wall Street’s expectations used to prompt murmurs of disapproval, like the time Facebook Inc. CEO Mark Zuckerberg wore sweatshirts to investor meetings during the company’s pre-IPO roadshow.

But now it’s “as expected as a blue pinstripe suit on Bay Street,” said Michael La Fave, editorial and creative director at Sharp, a men’s fashion magazine.

However, Mr. Rosen cautioned that not everyone can get away with the ultra-casual look.

“Tim Cook and Apple, they can get away with anything, he could have worn a bikini for all it matters,” he said.

“But if you’re not the head of Apple or the head of Facebook, I would suggest that you dress with a little more thought to the impression you make.”

Rosen said he would put Mr. Cook in a “nice soft sports jacket,” while Mr. La Fave suggested he try some of the more progressive menswear designers, like J. Lindeberg or Bugatti.

Globally, 30% of Apple employees are female. Women hold 20% of tech positions (engineering, programming, etc.) at the company and 28% of leadership positions. At Google, 30% of global employees are women, who fill 17% of tech roles and 21% of leadership positions. Stats at Facebook, Twitter, Yahoo and Intel — all of whom should be commended for voluntarily disclosing these employment figures — are surprisingly similar.

A clear gender imbalance exists. But is it cause for concern?

Absolutely. There’s a self-defeating argument going around that boys like tech and girls don’t; that’s the way it has always been and always will be. I don’t buy it, and I’m not the only one. Apple CEO Tim Cook explained bluntly that he was “not satisfied” with the diversity at his company. Google, equally concerned, recently invested US$50-million in programs aimed to help women in tech.

After reading Apple’s report, I felt it important to share how Hootsuite stacks up. Among its roughly 600 employees, 40% are women, and they fill 23% of tech roles and 38% of leadership positions, only a bit better than figures at the other companies. That got me wondering what we were doing differently and what we could do better.

The impact of workplace culture I don’t think this can be overstated. Although Hootsuite may have a youthful spirit — foosball, taps in the office, rooftop parties — the company has worked to avoid the testosterone-drenched frat-boy atmosphere that sometimes prevails at startups. It has tried to embrace the best elements of the Silicon Valley scene — the willingness to take risks, the disrespect for precedent, the relaxed, come-as-you-are office environment — while steering clear of the misogyny and other hangups.

From the beginning, HootSuite has hired the best people for the job, and they’ve found, I hope, an atmosphere where merit and enthusiasm, not gender, matters. Bringing aboard the right kind of people, in turn, has created a virtuous cycle: As it has expanded to hundreds of employees, the culture HootSuite created has evolved and thrived thanks to their contributions.

This type of atmosphere can make a big difference. More than 50% of women in private-sector science and tech jobs drop out without returning, a 2008 study by the Center for Work-Life Policy, shows. And one of the main reasons cited is “hostile macho cultures — the hard-hat culture of engineering, the geek culture of technology or the lab culture of science.”

Lack of applicants A big reason there’s a gender disparity in tech is that so few women are applying. In the past20 yeears, the percentage of bachelor’s degrees awarded to women in almost all science and technology fields has increased, sometimes dramatically, with one important exception. “Computer science actually is more male-dominated today than it was two decades ago,” writes New York Times’ science columnist Catherine Rampell. In 1991, women received 29.6% of computer science bachelor’s degrees in the U.S.; in 2010, just 18.2%.

Something is deterring young women from entering the field. By the time girls are in high school, tech has often already been ruled out as a career option. Only 1% of high school girls express an interest in majoring in computer science in university, a report from the American Association of University Women notes.

Making progress on gender imbalance requires getting more girls interested in computer science at an earlier age. This isn’t a quick fix. It involves rewriting perceptions of programming as a “boys’ thing” and showing that rewarding careers await women, too.

Fortunately, there’s a growing movement to do just that. Efforts are scattered across North America but expanding fast. Started in 2012, Girls Who Code has grown into a U.S.-wide network of clubs and camps to teach young girls everything from mobile design to robotics. Meanwhile, Canada-based Ladies Learning Code has introduced more than 8,000 women and girls to programming since 2011. Other grassroots efforts are cropping up around the world.

Changing startup culture from the inside The same gender disparities that affect tech hiring are even more pronounced when it comes to startup founders. Just 1.3% of founders at privately held, venture-backed companies are women, a 2012 Dow Jones study, found.

Finding ways to get young women interested not just in engineering but in creating businesses is an absolutely critical step in changing tech culture and addressing the gender imbalance. Women founders, after all, have the opportunity to create their own workplaces, actively redefining the atmosphere and attitudes in the startup world.

Fostering this kind of shift was the motivation behind starting an entrepreneurial mentorship program called The Next Big Thing. This year, HootSuite is receiving its first group of 10 young entrepreneurs, three of whom are women. Chosen in a competitive process from hundreds of applicants, they’ll spend a six-month residency inside the company, incubating their startup ideas and getting the technical and business tools to succeed.

It’s no accident that the program’s co-founder, Meredith Powell, is a successful entrepreneur with a long history of supporting women in tech. Once women are able to see themselves in tech careers and at the helm of startups the self-perpetuating old boys’ club myth will start to crumble.

]]>http://business.financialpost.com/entrepreneur/why-the-gender-gap-in-tech-is-not-normal/feed0stdTech giants more transparent about diversity problem, but what will it take to close the gender gap?http://business.financialpost.com/executive/executive-women/tech-giants-more-transparent-about-diversity-problem-but-what-will-it-take-to-close-the-gender-gap
http://business.financialpost.com/executive/executive-women/tech-giants-more-transparent-about-diversity-problem-but-what-will-it-take-to-close-the-gender-gap#commentsFri, 22 Aug 2014 11:00:30 +0000http://business.financialpost.com/?p=468459

It seems to be the summer of transparency. At least for Silicon Valley’s tech giants. The first power player to share its diversity statistics was Google, quickly followed by Yahoo!, Twitter, Facebook and most recently, Apple.

All report similar numbers when it comes to the male-female makeup of their companies: about 70% male; 30% female, with even fewer women in senior leadership and technical roles. Yahoo!, which boasts a female chief executive, is just slightly better, with women accounting for 37% of its workforce. That said, 77% of its vice-presidents and more senior leaders are men.

Canadian Women in Technology (CanWIT), a national volunteer organization that helps advance the careers of women in technology and encourages young women to enter the technology field, said the picture in Canada is even more disappointing. Only 24% of people working in advanced technology sectors are women. That number drops to 17% when you look specifically at women in core technology roles.

“The challenges for women in tech are consistent study to study: it’s who you know, your networks; not being heard in the same way as men; lack of confidence; young women dropping science and math (the building blocks for a career in technology) in high school and the resulting low numbers of women going into technology in post secondary,” said Sandra Wear, a Vancouver-based entrepreneur and chief executive of CanWIT.

Ms. Wear, who co-founded and built DocSpace and Atalum and now helps other tech entrepreneurs grow their businesses, experienced some of those challenges firsthand. “When I joined my first company, I was asked to get the coffee in a board meeting. I would say things and people would not hear me or someone would repeat it and it would be credited to them as a great idea. It finally clicked in that it was because I was a woman.”

Handout/Red HatDeLisa Alexander executive vice president and chief people officer of tech company Red Hat, based in Raleigh, North Carolina.

She makes the case that women and industry have a role to play in changing the current gender landscape in technology. “As women, I don’t think we can focus on the problems; they exist. We need to focus on the objective, which is ‘how do I see my professional arc move, how do I associate with the people I want to associate with, and how do I get the roles I want.’ That’s No. 1.”

Equally important is taking action to effect change. While Ms. Wear admires the tech giants who are acknowledging the gender gap, she’s waiting to see what they do about it. “As a company, if you have decided you want to achieve parity in leadership, you have to look at the funnel of talent and cultivate women. Organizations have done this successfully but only when the CEO wants and has committed to making changes. It has to come from the top,” she said.

That’s what Maria Klawe did when she became the first female president of Harvey Mudd College in 2006. The mathematician, computer scientist and scholar led an ambitious strategic planning initiative that included diversity at all levels and developing the whole person among its key themes. This year, for the first time in its history, the college awarded more engineering degrees to women than to men at its annual commencement in May. Fifty-six per cent of students who graduated this spring in engineering were female, and 44% were male.

In the past three years, $1.5-billion open source leader Red Hat has been formalizing its path to gender parity. While it has not publicly released its diversity profile, DeLisa Alexander, executive vice-president and chief people officer, confirmed its numbers are in line with those disclosed by Google, et al.

Ms. Alexander said she joined Red Hat in 2001 because of its mission. “As a lawyer, to be part of company looking to change the world using copyright law in a different way … that sharing is required was appealing to me. As a woman, I got it. I understood the power of sharing and collaborating and being connectors.”

In many ways, Red Hat’s corporate culture aligns with its business model. Jim Whitehurst, the company’s CEO, has spoken about what makes the company tick, describing it as a meritocracy where debate is encouraged, ideas and opinions are heard, if not always acted on and where performance dictates how far you can go.

HandoutRed Hat is now taking its culture of meritocracy and focusing it on talent needs in a scalable way that works for everyone, not just women.

All attributes that make the work environment particularly attractive to women, said Ms. Alexander, whose career has benefited from that focus. “What I experienced was a high growth company with the problem of plenty to do and plenty of opportunity for someone who was interested in learning and growing to take on additional responsibilities,” she said.

“My boss was fabulous at giving me opportunities to do things that were not my bailiwick. This is especially important for women. No one cares what your gender is. If you want to learn, collaborate and solve problems you will advance.”

Red Hat is now taking its culture of meritocracy and focusing it on talent needs in a scalable way that works for everyone, not just women. It has created a set of guiding principles and has taken an individual strength-based approach to talent development that works particularly well for women. “It gives them the opportunity to have a supportive forum with their manager to articulate without feeling uncomfortable what their aspirations are, what they believe they are talented in, and the manager’s role is to connect those strengths and interests to development opportunities.” The company is training all its people how to have these conversations effectively.

It has also created a Women’s Leadership Community that connects female employees with educational events, networking opportunities and support to help them advance their careers.

Looking beyond Red Hat, the company is working toward being a leader for women in open source more broadly. To that end, it sponsors outreach groups and initiatives to get more girls into STEM programs including the GNOME Outreach Program for Women, the Grace Hopper Celebration of Women in Computing, PearlHacks, PyLadies and more. It recently announced the Women in Open Source Award to recognize women’s achievements in the industry and to inspire the next generation to get involved.

A critical step, Ms. Wear said. “We need to get girls interested in science early on and we need to let them know they can do it. We need to build critical mass. That starts to change it.”

Apple Inc. released data showing it is slightly more diverse than some of its Silicon Valley rivals, according to figures announced today.

Of the company’s 98,000 employees, 70% are white or Asian. Eleven percent of Apple’s workers are Hispanic, and 7% are black, closer to the national averages for the overall U.S. workforce than other technology companies. The company added that 30% of its workforce is female.

“Let me say up front: As CEO, I’m not satisfied with the numbers on this page,” wrote Chief Executive Officer Tim Cook in a blog post. “They’re not new to us, and we’ve been working hard for quite some time to improve them.”

The world’s most valuable company is the latest giant technology firm to report diversity numbers amid a debate about whether Silicon Valley firms are underrepresented in women and minority employees. Facebook Inc., Google Inc, EBay Inc., and others have also disclosed workforce information. The research has added fuel to the debate by showing workforces that are predominantly male and often white or Asian.

Last month, Cook said the iPhone maker planned to eventually release information about the diversity of its workforce, without giving a time frame. A group of shareholders has pressed Apple to diversify its leadership ranks and board, which has two female directors, including this month’s addition of BlackRock Inc. co-founder Sue Wagner.

Data Trove

At Facebook, Google and Twitter, women make up about 30% of staff and blacks about 2%. At EBay, women are 42% of its staff and 7% of its U.S. employees are black, the company said last month.

Google helped start the recent spate of diversity reports when it unveiled its data about two months ago. Laszlo Bock, Google’s senior vice president of people operations, highlighted in a blog post the lack of qualified minority and female technology experts, citing a U.S. Department of Education study that found women earn just 18% of computer-science degrees in the U.S., and that blacks and Hispanics each collect fewer than 10% of computer-science degrees.

Apple Inc. Chief Executive Officer Tim Cook said the iPhone maker plans to eventually release information about the diversity of its workforce, following technology companies including Google Inc. and Facebook Inc.

“We’ll release the information at some point,” Cook said at the annual Allen & Co. media and technology conference in Sun Valley, Idaho, without giving a timetable for a disclosure. “We are more focused on actions.”

Silicon Valley companies are facing criticism for the lack of diversity among its employees, particularly women and minorities. A group of shareholders has pressed Apple to diversify its leadership ranks and board, which has one woman director. Social-networking firms Facebook and Twitter Inc. were criticized leading up to their initial public offerings for not having any female directors, which the companies have since taken steps to address.

Facebook said on June 25 that its workforce is 31 percent female and that 91 percent are white or Asian. Those numbers were in line with recent disclosures made by Yahoo! Inc., Google and LinkedIn Corp.

After launching 42 Technologies Inc. at New York Fashion Week 2013 and TechCrunch Disrupt, my team and I were accepted into the Winter 2014 cohort of Y Combinator, a Mountain View, Calif.-based accelerator that funds startups from around the world, including Dropbox, Reddit, and AirBnB.

During the program I learned so much, and would like to share some of these insights with like-minded entrepreneurs:

Endurance is a major predictor of long-term success: Many inspirational founders shared their stories, including the CEOs of Pinterest and AirBnB. Nobody had an easy road. The AirBnB founders — with a company now valued at US$10-billion — had a famous story of hot gluing 1,000 cereal boxesto pay expenses in the early days. You can succeed, but often it is a matter of how badly you want to.

You will grow what you measure: Take a sticky note, and write one goal on it. Be specific. Now place it on your bathroom mirror, so that each morning you’re reminded of your No. 1 growth priority. If you’re building a company, this should be a week-over-week metric such as users or revenue.

Do not mistake activity for growth: Startup founders often don’t know what truly constitutes growth. Adding features to your product is not growth. Neither is getting a fancy office or going to events. Adding customers and building product counts as growth — that’s about it.

The key to growth is progress: If you’re not moving forward, here is a way to get tasks done through a life hack called workstation popcorn. You start with a list of three tasks, each with sub tasks. You go to three coffee shops and only move to the next one when you’re done a task. Make progress each day and you win.

The winner between the alligator and the bear is determined by the terrain: Negotiate on your territory. Play up your strengths.

Make decisions quickly: Time is a cost. There are 24 hours in a day, and only about 10% of the information needed to make most decisions. Understand the magnitude of decisions you are required to make and prioritize accordingly. Train yourself to become decisive, so you can move forward with execution.

Do not focus too much on competition: If I decided to become a basketball player tomorrow, do you think it would affect LeBron James’ career? Ignore the noise, because what others are doing is out of your control and they’re probably amateurs. Be aware of the players in the space you are in, but focus on getting to the top of your game.

Hard work lays the base for success: When we first started market-testing 42, I spent weeks walking in and out of stores asking to speak with every associate and store manager. It was tough, but also gave me the most eye-opening insights. There’s no way around pushing code or making sales calls. The good news is that the tougher it is for you, the more difficult it is for others to replicate.

Opportunity is everywhere: The first time I visited Silicon Valley I was very disappointed. There was no teleportation, no wireless ports, not even robots who greeted you at reception. Now I see it as great news, it means there are still countless opportunities for you to introduce ideas that will shape our future. No excuses, get building.

Cathy Han is the co-founder and CEO of 42 Technologies Inc., a predictive analytics platform that leverages point-of-sale data to provide customer insight for retailers. She has worked in category development at Procter & Gamble, and is an alumna of the inaugural cohort of The Next 36.

The numbers were compiled as part of a report that major U.S. employers must file with the Equal Employment Opportunity Commission. Companies are not required to make the information public.

The gender divide is based on the roughly 44,000 people Google employed throughout the world at the start of this year. The company didn’t factor about 4,000 workers at its Motorola Mobility division, which is being sold to China’s Lenovo Group for $2.9 billion. The racial data is limited to Google’s roughly 26,600 workers in the U.S as of August 2013.

Facebook chief operating officer Sheryl Sandberg recently said the social networking company is headed toward disclosure as well, but it was important to share the data internally first.

Apple Inc., Twitter, Hewlett-Packard Co. and Microsoft Corp. did not respond immediately to queries about possible plans to disclose data.

Bock said Google has been working to diversify, not just its offices but in the broader tech sector. Since 2010, the firm has given more than $40 million to organizations working to bring computer science education to women and girls, he said.

The company also is working with historically black colleges and universities to elevate coursework and attendance in computer science, he said.

We’re the first to admit that Google is miles from where we want to be

“But we’re the first to admit that Google is miles from where we want to be, and that being totally clear about the extent of the problem is a really important part of the solution,” he said.

Gender and ethnic disparities are reflected throughout the tech industry. About 7% of tech workers are black or Latino in Silicon Valley and nationally. Blacks and Hispanics make up 13.1 and 16.9% of the U.S. population, respectively, according to the most recent Census data.

Related

In the coming months, Google said, it will work with the Kapor Center for Social Impact, a group that uses information technology to close gender and ethnic gaps in the Silicon Valley workforce.

AP Photo/Eric Risberg, File

The centre will be organizing a Google-backed conference in California focusing on issues of technology and diversity.

Co-founder Freada Kapor Klein, who started the Level Playing Field Institute 13 years ago to teach and mentor black and Latino students in science and math, said Google is showing leadership “which has been sorely needed for a long time.”

“Google is the company known for the moonshot, and applying that part of Google DNA to this problem is a breath of fresh air,” she said.

Earlier this year, the Rev. Jesse Jackson launched a campaign to diversify Silicon Valley, asking to meet with leaders of several iconic technology companies about bringing black and Hispanics into their workforce and leadership.

Since then, he’s been leading delegations to annual shareholder’s meetings at firms including Google, Facebook, eBay Inc. and Hewlett-Packard.

On Wednesday Jackson said Google is to be commended.

“It’s a bold step in the right direction. We urge other companies to follow Google’s lead,” he said.

“Silicon Valley and the tech industry have demonstrated an ability to solve the most challenging and complex problems in the world. Inclusion is a complex problem — if we put our collective minds together, we can solve that too.”

Iris Gardner, a manager at non-profit Code2040, which places high performing black and Latino software engineering students in internships with top tech companies, said Google’s disclosure could mark a pivotal moment in the push to diversify Silicon Valley.

“It is a big deal for them to be transparent about something that most companies haven’t in the past been willing to share,” she said.

]]>http://business.financialpost.com/executive/executive-women/google-white-workforce-diversity/feed0stdFP0530_Google_Diversity_620_ABAP Photo/Eric Risberg, FileMarc Andreessen on the future of Silicon Valley(s), and the next big technologyhttp://business.financialpost.com/entrepreneur/marc-andreessen-on-the-future-of-silicon-valleys-and-the-next-big-technology
http://business.financialpost.com/entrepreneur/marc-andreessen-on-the-future-of-silicon-valleys-and-the-next-big-technology#commentsSun, 25 May 2014 11:00:46 +0000http://business.financialpost.com/?p=440781

Silicon Valley is starting to feel a little less exuberant these days.

Some big startups are having trouble raising money. Others are delaying plans to go public. Hot new technologies such as Bitcoin have been struggling. With all the nervous chatter out there — Where is this going? What’s next? — I called on Marc Andreessen, who has lived through a bubble or two.

Mr. Andreessen, a prominent venture capitalist, has been at the epicentre of the tech business for two decades. In the early 1990s, he was a co-founder of one of the first major Web browsers, Netscape. He went on to start Ning, an early social site. Now, in addition to being voluble on Twitter, he sits on the boards of Facebook, eBay and Hewlett-Packard.

I got 28 minutes with him. But Andreessen speaks so quickly, it felt like 90 minutes.

Rather than ask if we are in the middle of another bubble, I asked Mr. Andreessen why some young companies can’t seem to raise all the money they want. His answer: Conditions ebb and flow. And right now, they are ebbing for some companies. But for others, capital is still available.

“We have not seen any pullback so far on private investment,” he said. “Actually, what we’re seeing is more of the opposite. We’re seeing a lot more institutional money — in particular from the hedge fund world — crossing over” into tech investing.

Related

But what about companies that can’t find their way to the stock market, such as Box and Square?

Mr. Andreessen pointed to 1997 and 1998, when the market for initial public stock offerings was briefly derailed by the Asian financial crisis. Before long, investor interest revved up again, and the Nasdaq stock market was flying high. (A few years later, of course, it came crashing down.)

So if a startup can’t go public just now, it’s no big deal.

“The nature of the public market is that it is manic depressive,” Mr. Andreessen said. “It gets excited; it gets depressed.”

Speaking of feeling down, I asked Andreessen a question I often hear from people outside Silicon Valley: Why can’t other places build their own valley-style tech hubs? People in cities as varied as Dublin, Berlin and New York often ask what they are doing wrong.

He said new valleys would eventually emerge. But they won’t be Silicon Valley copycats.

In the past couple of years, venture firms have invested in startups in Los Angeles, New York, Chicago and all over China. Los Angeles, for example, is home to Snapchat, Tinder, Whisper, Oculus VR and Beats, some of the big tech stories of the year.

But he offers a caveat: “My personal view is that Silicon Valley will continue to take a disproportionate share of the No. 1 positions in great new markets, and I think that’s just a reflection on the fact that the valley works as well as it does,” Mr. Andreessen said.

In Mr. Andreessen’s view, there shouldn’t be 50 Silicon Valleys. Instead, there should be 50 kinds of Silicon Valley. For example, there could be Biotech Valley, a Stem Cell Valley, a 3-D Printing Valley or a Drone Valley. As he noted, there are huge regulatory hurdles in many of these fields. If a city wanted to spur innovation around drones, for instance, it might have to remove any local legal barriers to flying unnamed aircraft.

So what kind of valley would Mr. Andreessen build? He is a big believer in digital currencies and in virtual reality. He says enterprises like Bitcoin will change the world on the scale that Web browsers did. And before long, virtual reality will be, well, reality.

Don’t believe him? Mr. Andreessen recalled similar skepticism in May 1994 when he was showing media and telecommunications executives this bizarre development called a Web browser.

“They pretty much told us we were out of minds and to go away,” he said. Five years later, Netscape was sold to AOL for US$4.2-billion.

Finally, I couldn’t end my discussion without asking him about Twitter. In the past several months Mr. Andreessen has become a mantle on the social network, known for his long stream of tweets that have become known as the “Marc Andreessen Tweetstorm.”

“My view is that 140 characters doesn’t make sense anymore,” he said. “If it was me, I’d immediately raise the limit to 300 or 400 characters.”

But if that doesn’t happen, he’s incredibly bullish on the service just the way it is.

“The counter-argument is that there is magic to the limitation,” he said, laying out a number of virtues around the limited character lengths. “If Twitter doesn’t adapt, I would not view them as being stupid. I just hope they change it because it would be a lot better for me.”

]]>http://business.financialpost.com/entrepreneur/marc-andreessen-on-the-future-of-silicon-valleys-and-the-next-big-technology/feed0stdHow to attract the best venture capitalistshttp://business.financialpost.com/entrepreneur/how-to-attract-the-best-venture-capitalists
http://business.financialpost.com/entrepreneur/how-to-attract-the-best-venture-capitalists#commentsWed, 21 May 2014 16:03:52 +0000http://business.financialpost.com/?p=440239

What are venture capitalists really looking for?

Is ROI the only thing that impresses them? Should you ever get to know them as people? Can you guilt them?

If you’ve wondered how to influence venture capitalists, Bloomberg BusinessWeek magazine just interviewed a half-dozen of the top VCs in the United States and asked them the million-dollar question, “How do you decide who to give money to?”

The answers were diverse, personal and illuminating. The interviews make them sound almost human. And they provide lots of clues as to how to reach them.

“In health care, we live and die by management’s experience and ability to execute.” — Adele Oliva, 1315 Capital, Philadelphia

“We work hard to reach the point where we — and the entrepreneurs we back — feel that the business, people, and relationships are the right fit.” — Tony Grover, RPM Ventures, Ann Arbor, Mich.

“I fund a startup when I see the kind of passion from its founders that enables forward momentum.” — David Cremin, DFJ Frontier, Los Angeles

“Research, research, research… Doing enough work to make yourself as certain as possible is a critical factor in investing.” — Dan Borok, Millennium Technology Value Partners, New York City

“I ask myself, ‘How will I feel in a year if I pass on this opportunity?’ ” — Alison Wagonfeld, Emergence Capital Partners, San Mateo, Calif.

“Many startups have passionate founders — and working with those founders is the best part of my job — but a company with passionate customers always gets my attention.” — Jodi Sherman Jahic, Aligned Partners, Menlo Park, Calif.

Clearly, the message is to ignite the passion. Successfully funded companies require passion from the founders, from their market opportunities, and from their customers. Get all three of these factors aligned, and even Silicon Valley’s toughest dealmakers will pay attention.

One of entrepreneurship’s most influential thought leaders is Steve Blank, a former Silicon Valley serial entrepreneur who cashed out in the dot-com boom and then thought hard about what made him successful. He concluded that no one really understood what startups do. His work led to three books, teaching gigs at Stanford, Berkeley and Columbia, and the Lean Startup, a concept that has altered the way we think about business development.

Live via satellite, Blank was a keynote speaker at last week’s Discovery conference in Toronto hosted by Ontario Centres of Excellence, a government-funded agency that promotes innovation and commercialization. OCE asked me to conduct the interview with Blank, an experience that left me sitting alone on a massive stage, in front of a giant video screen and 2,500 entrepreneurs, bureaucrats and business advisors.

With his experience, insight, and sense of humour, Blank literally changed people’s perception of the startup experience. To get you up to speed, here are a few excerpts from our conversation.

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QCan you tell us how you came up with the “Lean Startup,” and what it means to you?

A The big observation is that for 50 years in Silicon Valley, investors told us as entrepreneurs that startups are nothing more than smaller versions of large companies. Large companies write business plans, so you write business plans. Large companies execute to the plan, and if you fail, it’s because you weren’t good enough.

I did eight startups in 21 years, and after I retired I started thinking about what worked and what didn’t. I realized something quite heretical at the time: startups are nothing like large companies. Large companies execute known business models, but startups search for business models.

This distinction between search and execution not only hadn’t been articulated, but we didn’t have any tools for this search. So I realized we needed a new theory and a new set of tools to address what entrepreneurs and founders face on a day-to-day basis.

RS So what does “Lean” mean, and how does it work?

SB The lean startup now has three components. They are all based on the fact that for a startup, there are no facts inside your building. While you might be the smartest person inside your building, there’s no possible way you could be smarter than the collective intelligence of your potential customers.

I remind my students at Stanford and Berkeley that while you think you understand the problems of your customer, all you really have is a series of untested hypotheses. So the whole idea of the lean startup is to validate, or test, your guesses before you spend a lot of time and money on it.

RS But I know so many entrepreneurs who really like their office, or their garage. They leave there only reluctantly.

SB That gets to the core of, what is an entrepreneur? A founder is a visionary; a founder sees something or hears something other people don’t. But it turns out that if you’re a founder, and you envision something new, the odds are you’re hallucinating, not being a visionary. You’re actually seeing things that aren’t there.

To differentiate the hallucination from the vision requires you to get out of the building and validate: Is this a mirage? Is my passion overwhelming the rest of my senses? That’s what makes customer development hard. It just goes against the DNA of a founder who says, “Let me just build this. Get out of my way!”

RSHow do we get started in customer-development work?

SB You start with the first component: You line up your hypotheses on a single page with what Alexander Osterwalder [entrepreneur and business model innovator] calls the business-model canvas. Then you set up the hypothesis-testing just like a science experiment. What kind of experiment do we want to run? What kind of feedback do we expect? What kind of data did we get, and did it drive any changes to the hypotheses?

Then we usually build what Eric Ries [pioneer of the lean startup movement] calls the MVP: the minimum viable product. It’s either a smaller version of the product, or little pieces to test different parts of the business-model canvas. And we run a series of tests to see if we get back what we expect.

And here’s the big idea. In the old days, investors would expect that if there was any failure, it was your problem. You personally failed. Now we know that startups go from failure to failure, learning as fast as they can. And this process allows us to do that learning as quickly as we can.

RSWhat about the shy entrepreneur? Is there no way they can get out of this without talking to customers?

SB No. When we teach this process to 22-year-olds in hoodies and flip-flops, or to 52-year-old scientists, by the time they’re done they will have talked to 100 customers, eyeball to eyeball. There is no faking that data. There’s no denying what you’ve heard.

RSWhat do you see as the impact of the Lean Startup approach?

SB I don’t think the Lean Startup will make you the next Google or Facebook. The way to think about it is, it will give you more shots at the goal than any other method. It allows you to iterate and/or pivot so you have multiple chances of getting it right. It allows us to husband our resources. A lean startup is not a cheaper startup, but it tells us where and when to put our resources before we spend a lot of money.

Even though Michael Litt’s startup Vidyard had nabbed a spot in a prestigious Silicon Valley-based incubator and garnered $1.65-million in seed funding from investors including the likes of Netscape co-founder Marc Andreesen and YouTube co-founder Jawed Karim, it still wasn’t enough to lure Canadian institutional investors.

In 2011, buoyed by his video-marketing and analytics platform’s funding success in the United States, Mr. Litt approached an institutional investor in Canada, who replied that Vidyard “needed to have more traction in order for them to suitably invest,” he said.

Vidyard ended up raising another $1.1-million from U.S. investors, he said.

By March 2013, Vidyard’s reception in Canada was much warmer. Armed with more evidence of market fit and an experienced vice-president of marketing on board, Vidyard raised $6-million in Series A round funding from Toronto-based OMERS Ventures, iNovia Capital in Montreal, as well as Paolo Alto’s SoftTech VC, and former Eloqua and Salesforce.com executive Jill Rowley.

“The combination of those two things, increased traction and bringing on a senior individual to help manage the marketing process definitely helped,” Mr. Litt said. “They could justify investing the money in our business, and because we had senior talent that was going to help us spend it effectively.”

This is what Canadian startups need to do more of to get funding in their home country, said Michael Grant, director of capital markets research at the Conference Board of Canada in a recent report.

Canadian entrepreneurs fail to find financing not simply because of a lack of good ideas or risk capital, but due to a lack of management know-how, he wrote in Start Me Up: Funding Canada’s Emerging Innovators.

Evidence suggests Canada has many enterprising individuals, but not that many innovators with the capacity to demonstrate how they will commercialize their innovations, he noted.

“At the end of the day, risk capital is going to be mostly interested in your ability to run a business,” said Mr. Grant, who is based in Vancouver. “By all means, they like good ideas for a product, but ideas alone are not sufficient to get risk capital.”

It’s one of the many recommendations to improve startups’ funding success rate that Mr. Grant makes in the report.

Early-stage financing is crucial for fostering innovative ventures, and finding the next billion-dollar company. However, in Canada, nearly three-quarters of entrepreneurs say they struggle to find financing, a recent EY survey found. Some 140,000 new businesses are started in Canada every year, while about 130,000 close their doors in that time, the Conference Board said.

Mr. Grant, the Conference Board’s director of capital markets research, estimates the risk capital available in Canada to be about $1-billion to $2-billion a year, while new businesses need closer to $10-billion a year.

“You’re talking about a niche of a niche here,” Mr. Grant said. “And it’s a challenge to get those people together — people that are looking for a very particular type of deal in a particular way with the people who have good businesses that are worthwhile investing in with risk capital.”

Beyond the need for entrepreneurs to shore up their business competencies, financiers have their work cut out for them as well, Mr. Grant said.

Canada’s risk capital market is “nascent.” But, he argued, it isn’t because Canadians are more risk averse.

Canada’s TSX-Venture exchange is one of the best small cap public exchanges in the world, investors are historically more comfortable taking risks on resource companies, such as mining.

While startups can turn to a growing number of angel investor groups in Canada, the sphere is relatively new, with the bulk of them being formed within the past five years, the report said. Angel groups need to be better organized, participating in larger syndicate fundings, including in co-operation with venture capital and other risk capital providers, Mr. Grant said.

Canada’s track record of selecting deals and earning returns also has much room for improvement. To change this, venture capitalists and angel investors need to improve their strategy for seeking out viable startups, but also by better communicating the criteria that needs to be met, he said.

“Canada has enough institutional funders and high-net-worth individuals to improve the depth and breadth of Canada’s risk capital, if they choose to become more engaged.”

Canada has most of the elements in place for a healthy startup ecosystem, but we have much more work to do, Mr. Grant said.

“People have to get better at managing companies, knowing when to bring in help, and VCs need to be better and angels need to develop a bit more,” he said.

“Most of the things we are doing now are right and we have to see how they improve over the next five years… we should be able to do better.”

Mr. Litt disagrees with the notion entrepreneurs without enough business savvy are the issue. He said that startups with little but a good idea and a visionary founder have found receptive investors in Silicon Valley, including successful social media giants Facebook and Twitter, and apartment-rental website AirBnB.

“We don’t have any of these in Canada… There are are no multi-billion dollar startups that have only existed for five or so years. Why is that?” he said.

“It’s probably because there isn’t that irrational money putting bets on naive, non-business oriented founders. And the Canadian mentality is to be safe, and to make safe investments.”

However, Danny Robinson, serial entrepreneur and founder of Vancouver incubator Bootup Labs and video technology company Perch, said Silicon Valley is a difficult comparison because it is a much more mature market. When you take that out of the equation and compare Canada to other countries, Canada holds its own, he said.

While there is much room for improvement, in some ways the Canadian pragmatic approach has been positive, he added.

“There’s been smaller companies, but more often successful companies being funded,” Mr. Robinson said. “You don’t get the big Facebooks here, but you get a lot more in terms of sustainable companies that are doing good for the economy.”

Unfortunately, Mr. Litt said, the best and brightest who don’t get funding will simply go find money in the U.S. “That’s what we’ve ultimately done when we needed to,” he said.

“Ideally, we can keep getting funding in Canada, but, the smart ones will go to the U.S. because that’s where they can actually get the cash.”

Ethan Song, co-founder and chief executive of Montreal-based menswear brand Frank & Oak, says that’s part of the problem. To foster a better environment for startups, we need innovative companies to stay on home soil.

“The one way to contribute to the community is to build their large companies here in Canada,” he said.

“For a few companies to become billion-dollar companies, and stay in Canada. And from these companies, you will have hundreds of alumni that will go on to build their own companies. That’s the best way to build a community here. I find that’s what’s lacking right now.”

Ask city officials in Kitchener and Waterloo, Ont., where the future of Canada’s technology sector lies, and they’ll show you a map of Silicon Valley.

The bustling stretch between sunny San Francisco and San Jose — home to giants like Google and Apple — has become the template for a new vision of Ontario’s technology sector, which is redefining itself in the wake of BlackBerry’s massive layoffs.

Instead of going it solo, Waterloo organizers hope to mimic Silicon Valley by strengthening ties to tech organizations in Toronto. The goal is creating a new technology “supercluster,” said Iain Klugman, president and CEO of Communitech, a government-funded organization that rallies behind Waterloo technology firms.

“We need to gang up to take on the world,” he said.

“Toronto and Waterloo are different enough that we each bring something significant to the table. It’s a massive asset we’ve got.”

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In the past, complementary traits between the two cities were rarely synchronized, which left both isolated, even though together they employ more than 205,000 people in the tech sector.

Communitech estimates it worked with 802 active startups over the past year, with 464 of them putting roots down in Waterloo during the same period.

While numbers for Toronto are more fragmented, organizations there suggest about 1,500 active startups exist in the area.
Here’s where the potential lies, said Rod Regier, executive director of economic development in Kitchener.

Waterloo, like San Jose, is widely regarded as the brain centre of Canada’s tech talent, helped by the steady flow of graduates from the University of Waterloo. Toronto, like San Francisco, is an international travel hub with a large chunk of the country’s venture capitalists located on Bay Street in the downtown core.

“What I’m not saying is that we’re trying to replicate Silicon Valley or anything like that,” Regier said. “We just need to be more strategic.”

Unlike Silicon Valley, where developed suburban communities fill in the gaps, the link between Waterloo and Toronto is tenuous. A journey down Highway 401 from Waterloo begins with mostly farmland and cement barriers until near Toronto when a concentration of industrial buildings eventually give way to the big city.

THE CANADIAN PRESS/Dave ChidleyThe Canadian flag flies in front of the Research In Motion (RIM) company logo on one of their buildings in Waterloo, Ont., on June 29, 2012.

Silicon Valley could have been described in a similar way, but the presence of Stanford University and its graduates laid the foundation for a thriving community built decades ago — first on silicon chip innovation and innovative companies like Hewlett-Packard and Xerox. Since then, the region has grown to include software and Internet giants such as Netflix, Amazon and Pixar.

Ontario has struggled to define itself as a technology centre. Ottawa thrived for years as Silicon Valley North, an epicentre of growth with companies such as Nortel Networks and JDS Uniphase Corp. employing thousands during the dot-com boom.

After the bust, BlackBerry emerged in Waterloo as a force to be reckoned with as smartphones became mainstream and international names like Huawei Technologies, Cisco Systems and Rockstar Games moved into the region.

While all of this happened, Toronto sat on the outskirts of the technology booms as more of an afterthought.

“One of the problems with Toronto is that the ecosystem is highly fragmented geographically,” said John Ruffolo, CEO of the venture capital wing of the Ontario Municipal Employee Retirement System.

“A key ingredient is the physicality of people and ideas colliding with each other serendipitously. The next evolution is to connect the two dots.”

Underdeveloped transit infrastructure may be the best place to start.

Last week, Ontario Transportation Minister Glen Murray unveiled plans to help bridge the gap that’s hindered development in the region. The provincial government says it would consider a high-speed rail line between London, Kitchener-Waterloo and Toronto, as part of an environmental assessment scheduled for the fall.

The rail line would address persistent complaints that there’s a lack of sufficient public transit between Waterloo and Toronto, and infrequent Go Train schedules that have left commuters frustrated and turning to the highway in droves.

THE CANADIAN PRESS/Nathan DenetteApril Dunford, Chief Operations Officer at Tulip Retail poses for a photograph at her office in Toronto.

Large companies, like Google and Open Text, have tried lighten the burden on employees with coach buses that ship them from Toronto to Waterloo for regular collaboration sessions with their colleagues.

Smaller companies don’t necessarily have it so easy.

At startup Tulip Retail, employees have spent countless hours on Highway 401 as they frequently travel from the company’s offices in downtown Toronto to an outpost in Waterloo.

Chief operating officer April Dunford says the drive, which is supposed to be 90 minutes, can turn into more than three hours on a bad traffic day. She remembers one instance when a jackknifed truck blocked the highway and nearly erased an entire day of work.

“We got there, worked for a few hours, and then we had to turn around and come back,” Dunford said.

“There really is no substitute for a certain amount of physical face-to-face time, and that’s the hardest part of this.”

For organizations dedicated to growing the region, the challenge will be changing the way they think about Ontario’s technology industry.

In recent years, several groups were founded to represent tech companies throughout the Greater Toronto Area. Each one aimed for development within their own municipalities as a priority, which meant they were all fending for themselves.

Communitech hopes to usher in change that will link with neighbouring cities to capitalize on the growing number of tech businesses in the area. Already the organizations have begun to strategize through co-ordination calls and referral programs designed to help companies in Waterloo connect with government funded organizations in other cities.

“They successfully built a culture in Waterloo,” said Jeremy Laurin, CEO at VentureLAB, which represents the York region.
“So let’s all grab an oar and row the boat together.”

In the meantime, Ontario’s technology sector continues to grow at a staggering pace.

Last week, software company Open Text pledged to create 1,200 jobs in the province over the next seven years with the help of a grant from the provincial government.

Google is expanding its presence too, moving from a small office to a 185,000 square foot space in Kitchener later this year that could mean further hiring is in the works.

“There’s tremendous opportunity for us to continue that growth,” said Salim Teja, managing director at the Mars centre, which helps startups get their footing in Toronto.